Chemicals & Pharma

EWA runs strong

ERP is the favoured application followed by SFA. Companies are also discovering that outsourcing is a useful way to gain access to specialised skills in a cost-effective manner, finds Megha Banduni

The reasons for adopting IT vary. For the BFSI segment it is RBI’s stipulations, for chemicals and pharmaceutical majors, global competition, business needs and the issue of consolidation. The need for technology is thus becoming an integral part of an organisation’s growth plans.

The survey reveals that this sector is investing in IT to enhance its growth. Top areas of IT spending are ERP application, security, connectivity and packaged software.

Investments in ERP to rise

ERP remains the numero uno application. Pharma companies work on drug creation of many potential blockbusters simultaneously, and they have to keep track of different stages in the development of each drug. Also, they need to ensure that drug research data is integrated and available for the manufacturing units as and when required. This means that a company needs extensive control over manufacturing, storage and data. Hence, an ERP system is a necessity for a chemical or pharmaceutical company.

Of the respondents from the chemical and pharmaceutical companies, 31 percent have already invested in ERP solutions. Some of them are Hindustan Petroleum, Torrent Pharmaceuticals and Gujarat State Fertilizers and Chemicals (GSFC). ERP is favoured as it allows the user to integrate all existing processes and serves as the first step towards applications like SCM and CRM.

For instance, Torrent Pharmaceuticals has deployed SAP 4.7 and mySAP ERP solution since July 2004 integrating all its partners, plants and the corporate HQ. The software was implemented for all business functions across the company including off-site functions involving carrying and forwarding agents (CFAs) and third-party manufacturers (TPMs). Since deployment, the company witnessed successful migration of its legacy IT network and hardware to a cost-effective IT environment covering plants, R&D sites, head office, CFAs, field force and TPMs.

“All these had improved the quality and reliability of business information eventually leading to improved decision making,” says Jyoti Bandopadhyay, Vice-president, IT, Torrent Pharmaceuticals.

Integrating data is another reason why ERP is still favoured. For instance, HPCL has two refineries, 300 points of sale across the country and 30,000 customers. To improve the accuracy, consistency and efficiency of the systems supporting their business, they deployed OneWorld Xe 8.4, an ERP solution from JD Edwards.

As a result, the company benefitted in terms of improved collections, cash flow and working capital management, better management of inventory and logistics, availability of information resulting in faster decision making. “Earlier, we had to wait till the processing for the month was completed, now sales and other details are available in near real-time,” says M P Keshava, Senior Manager, IT, HPCL.

Customising ERP

The other aspect while choosing an ERP solution is whether to go in for a customised solution or for a packaged one. Companies in the chemicals and pharma sector prefer a ERP application developed in-house. Take GSFC, which implemented a customised ERP application in June 2003 for faster decision making without disturbing existing business practices.

A R Patel, Deputy General Manager-Systems, GSFC explains, “GSFC is a 44-year old company. Change management would have been difficult with standard ERP rules and business re-engineering. Benefits of in-house development are that we have overall control over the system, and faster modification or enhancement.”

Berger Paints has also built its ERP solution in-house. “The biggest benefit of using an in-house solution is that it can be customised as per our requirements. If we ask a third party to customise ERP software, it becomes expensive,” says Surajit Dutta, Senior Manager, IT, Berger Paints.

After ERP, application servers occupy second place, followed by CRM. Though CRM is generating some curiosity among the chemical and pharma companies, deployments are yet to happen.

Automating the sales force

Business is all about getting information at the right time and place. When information is to be exchanged between two locations, it becomes complicated. This is where Sales Force Automation (SFA) comes into picture. It is becoming popular among chemical and pharmaceutical companies as they need to know the requirements of their customers and keep records updated by handheld devices used by field staff.

For instance, Torrent has developed a Web-based solution called Torrentian.com for its 2,000-strong sales force. The solution uses ASP as its development tool, Internet Explorer as the front end, and .NET as the back end. Company representatives can log on to the system from anywhere letting the sales force access the company’s ERP system through a dedicated portal both in India and Germany.

“Earlier, the entire field support was done manually through telecalls and reporting, which resulted in delayed results. After implementing SFA, everything is on time. SFA has benefitted us in terms of increased productivity, faster decision making and the quality of decisions have also improved, resulting in revenue growth,” says Bandopadhyay.

He further says that at anytime during the day his company has at least 200 sales representatives online, and updates take place daily. The system allows the company to track progress on primary as well as secondary sales.

SFA helps in storing details like the samples dispatched, when the professional service representative (PSR) receives the sample, and when they were provided to a doctor. Also, the representative can download the automation application and other data from the company’s central server. He can store it on his mobile phone, select desired fields as part of his daily report, make changes, and send the same back to the server.

The advantage of SFA is that in case a doctor wants a report or details of a sample immediately, he can access it from a mobile device or a Web site instead of waiting for a call or fax from sales representatives who might be remotely located.

Security remains a concern

With competition in this segment increasing, security issues are also getting the required attention. While viruses represent a major threat, the second threat perceived by these organisations is theft or damage to data.

Says Keshava, “We are using firewalls, proxy, mail scanner and http content filtering at the perimeter. Internally, we have Trend Micro anti-virus for desktops and servers.” HPCL also has Windows automatic patch management in place and is in the process of finalising the order for end-to-end security solution for the enterprise.

In Torrent, entry to network is controlled by Nokia Checkpoint firewall. They have deployed anti-virus, IDS, and IPS solutions from Trend Micro. “We form security policy as per the requirement, because security is a process of continuous improvement, we cannot have a fixed policy for it. However there are a few common parameters to select a security solution such as requirement, robustness of the software, internal security, control and cost,” says Bandopadhyay.

Formulating policy

73 percent of the chemical and pharmaceutical sector respondents have a well-documented security policy and the top three people involved in framing security policy are the CIO, CEO and the functional head. Data and perimeter security remain the critical areas in forming a security policy.

"Virus attacks, hackers, unethical tampering of information and loss of mobile equipment with important data are critical security issues" M P Keshava Senior Manager, IT HPCL

At HPCL, the security policy formulated by the company covers functions such as access controls, hardware and software security, Internet and e-mail. “Virus attacks, hackers, unethical tampering of information and loss of mobile equipment having important data are the most critical security issues,” explains Keshava.

Although many in this vertical are also looking at deploying intrusion detection and access control devices to enforce security, actual implementations are few and far between. Dutta says, “We have routers, IDS and firewalls from HCL Comnet. Data security is a major concern; hence we have a special team that takes care of security issues.”

Leased line: the backbone

With the expansion of a company and the need to connect the branches along with increasing usage of application software, bandwidth needs also gone up. Despite new options emerging, leased lines remain the most popular option among large enterprises. 26 percent plan to make further investments in connectivity.

Leased lines remain the most preferred mode for Internet connectivity. Of the total respondent base, 93 percent use leased lines, 47 percent prefer ISDN and 33 percent dial-up. For inter-office connectivity, 60 percent prefer leased lines, 53 percent VSAT and 40 percent VPN. However, it is noteworthy that most of the companies use VSAT for backup links.

For instance, Torrent uses leased lines for their contract manufacturing plants, for backup they use VSAT. For offices outside India, the company uses MPLS VPN facility from VSNL. Dial-up is used only in small stations where there are one or two users.

GSFC has connected all their remote offices (40) using Reliance VPN. It is using 512 Kbps Internet leased line from Gujarat Info Petro. “Our remote offices are using this VPN connectivity to access our customised ERP application. For connectivity of depots (within Gujarat), wireless VPN enabled Tulip IT Services is under implementation,” says Patel.

Keshava explains “We use connectivity mainly for ERP, e-mail, employee portal and workflow applications. We have leased lines, VPN and VSAT for inter-office connectivity provided by BSNL, MTNL and HECL.” The company’s offices in the four metros are connected on a backbone of 2 Mbps. All the locations in a zone are connected to the zonal offices by VPN links of 64 and 128 Kbps. They use VSATs from HECL as a fallback.

Bandwidth is another area, where chemical and pharmaceutical companies are investing heavily. The primary need is Internet access, however, bandwidth demand is also driven by VoIP, video conferencing applications and messaging applications. Bandwidth usage also depends on the number of users accessing the Internet.

At Berger Paints, the need for connectivity arises due to a centralised database which should be accessible from anywhere. They are using leased lines as a backbone. The company has a WAN that uses VSAT as a backup.

Messaging gains popularity

Torrent uses IBM Lotus Notes for messaging. “A messaging server is one of the most critical pieces of software in any business, because communication is key to business and a messaging server is a gateway to communication,” says Bandopadhyay.

GSFC uses Sendmail on Linux. Patel says, “We have more than 800 e-mail IDs. All communication is through this mail server for faster movement of information and paper-less communication.”

HPCL is using Novell GroupWise Messaging server. Patel explains “Prior to the introduction of messaging, communication was paper-based. They had their problems of speed and ease of usage.”

With messaging in place, HPCL has adopted it as the principal means of communication and as a result, all the essential communications between people help in quick and meaningful decisions. Also, workflow-based applications are running atop the messaging framework.

Outsourcing non-core areas

Chemical and pharmaceuticals are outsourcing heavily in areas like networking and desktop applications. The key factors driving outsourcing in this vertical are cost-cutting, focus on core business, access to expertise, speedy delivery and resource constraints.

The first thing that a large chemical and pharmaceutical company looks for while choosing a third party is the kind of service and support it provides. They also look at the track record and, last but not the least, the cost advantage it offers.

Bandopadhyay says, “Outsourcing depends on a business model. In our organisation, it is part of business strategy. Before selecting a vendor, it is important to evaluate parameters like 24x7x365 support, anywhere and anytime availability, flexibility and cost.” At Torrent, the entire infrastructure maintenance, facility management and software development is outsourced to a third party. Some top vendors to whom they outsource are Allied Digital, Tata Indicom-VSNL, IBM, HP and Cisco.

"Outsourcing helps in faster development and a controlled environment" - A R Patel Deputy General Manager - Systems GSFC

Similarly, GSFC is outsourcing its software development, maintenance of computers, servers and network. “Based on specific needs we approach select vendors and decide according to their expertise. Outsourcing helps in faster development and a controlled environment,” says Patel.

HPCL outsources in the areas of network monitoring, telecom management, helpdesk and facility management services. “We look for reputed vendors with an all-India presence. The benefits are the freedom from non-core areas, savings on hardware, software and AMC costs,” says Keshava.

Dutta says, “The motive behind outsourcing is that a company can concentrate on its main business and a third party takes care of areas that the company is not specialised in.” The company has outsourced its entire network to HCL Comnet.

With a number of vendor options available in the market, many companies feel that the selection of a particular vendor depends on a company’s requirements and the kind of support it provides. Large enterprises opt for better technology disregarding the cheapest option.

In the chemical and pharma vertical, IT deployment depends on business needs. Technologies and applications like CRM and SCM are yet to make an impact since at this time they do not make much of a difference. However, companies do realise the need for a robust IT system and thus we find that related issues are getting the desired attention.